Philippine economic growth is likely to remain subdued in the first quarter of 2026 as weaker employment figures and rising inflation pressures weigh on activity, University of Asia and the Pacific (UA&P) economists said.
The university, in its March 2026 Market Call report, projected a gross domestic product (GDP) growth of 3.1 percent in the first quarter, before rebounding to above 5 percent in the second half of the year. Economists said earlier “green shoots” in economic data have faded amid escalating geopolitical tensions in the Middle East which has driven crude oil prices higher.
“Recent economic indicators, particularly low pre-war employment figures show weak first quarter of 2026 GDP growth at 3.1 percent year-on-year, but improvement is expected in the second half with projected expansion above 5.0 percent,” the economists said in the report.
The economists said faster growth in the second half of 2026 could hinge on an improvement in infrastructure spending.
Data from the Philippine Statistics Authority showed the number of employed Filipinos fell to 47.9 million in January 2026. This pushed the unemployment rate to 5.8 percent, the highest since June 2022, with an estimated 2.96 million unemployed Filipinos.
Inflation is also seen picking up higher than the 2.4 percent figure in February as tensions in the Middle East continue to affect domestic oil prices.
“Inflation will likely rise sharply to 4.2 percent year-on-year in March, compared to 2.4 percent previously, and may continue climbing until crude oil prices stabilize or decrease as more producers respond to higher prices and as Iran and the U.S. allow additional tankers to transit the Strait of Hormuz,” the economists said.
The experts said the peso will likely stay above the 59-per-dollar level while exports will likely remain strong.
“The peso-dollar rate will likely hold above P59.00/$ due to the surging crude oil prices and uncertainty as to the end of war. Exports should remain a bright spot with double-digit gains,” the economists said.
